The Brazilian government has published some additional terms regarding the next auction oil blocks under the production sharing regime, scheduled to be held later in 2019. Expected to sell-off a whole oil-producing zone known as the transfer-of-rights (TOR), it will be subject to additional detailed rules and the future winning bidders will have to compensate the state-held oil and gas company Petrobras for exploratory and infrastructure work it has performed in the zone. The government did not provide a monetary estimation so far and reported that compensatory values would have to be agreed between the winning companies and Petrobras at an assumed oil price of US$72/bbl. As for gas prices for the purposes of calculating the compensation, they will be set at US$5/MBtu.
The TOR zone was established in 2010 by the Brazilian government and Petrobras relating to a huge share offering that would have diluted the government’s stake in the company. To maintain its control in the company, the government sold its rights to explore 5 Gbl in the area for a total consideration of BRL74.8bn (approx. US$42.5bn) at the time and bought additional shares in the company with the funds. As of 2019, the country's oil regulator estimates that there are about 17 Gbl of recoverable oil in the area and the government is seeking to auction rights for the exploration of the excess oil while the two sides need to resolve the dispute. The intention is that companies bidding for the excess oil in the area would have to compensate Petrobras for investments the company already made in the blocks.
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